Will your disability insurance cover you if you become ill and unable to
work? Many advocates say probably not.
People like Melinda Carstens say they found out how difficult it can be
to try to fight an insurance company over their disability payments.
Carstens said fighting her disability is tough enough. But going up
against her insurance company is excruciating.
What’s the fight about? “The insurance company looking for a way to
save money,” said Carstens.
Carstens suffered severe nerve damage in an accident. A career woman,
she tried to keep working but said, “It was my doctors who said,
‘Melinda, stop. You have to quit work right now.'”
So Carstens went out on disability, believing company’s disability
insurance would provide two-thirds of her salary.
But she said her benefit was reduced by half under offsets in the
insurance contract. Carstens says she never saw that contract while
working for her employer. But a provision in the contract said that
since she was also receiving social security disability payments, the
company would reduce their payments by the amount of that social
security benefit: the practice called “offsetting.”
Carstens’ attorney Cassie Springer-Sullivan fought the decision and got
the payments reinstated, but the battle wasn’t over. Several years
later, the insurance company said it was entitled to take social
security disability benefits provided to her son.
Those benefits are government funds that all children of disabled
parents receive by law; money that Carstens said belongs to her son
“This is my son. And this is my son’s money. It’s not my money, it’s not
the insurance company’s money. It’s his,” Carstens said.
“That to me was just not fair,” said attorney Springer-Sullivan.
Attorney Ray Bourhis said insurance companies have too much latitude
because of loopholes in the law. He describes it as insurance companies
being “given a license to steal.”
Bourhis discussed the issues in his book about the industry, “Insult to
“The federal government doesn’t regulate insurance at all,” said
Bourhis. “In terms of claims handling practices, fraudulent practices,
malicious practices, abuse practices.”
Bourhis said that means if you get disability insurance through your
employer, as most people do, you’ll have little recourse if you think
your insurance company isn’t playing fair.
“No matter how bad, what the company is doing, you can’t go after them
under federal law,” Bourhis said.
But an attorney who represents insurance companies disagreed.
“There’s the standard statement, you know, blame the insurance company,”
said attorney Kara Baysinger. “And I don’t think that’s fair in this
Baysinger said in general, disability insurance products work.
“The ones that the media picks up on are the ones where a consumer feels
wronged. But for every one of those, there are thousands and thousands
and thousands of people who are collecting benefits every day — who are
able to move on with their lives,” said Baysinger.
But Baysinger admitted that the benefits people receive depend on the
rules laid out in the insurance contract.
“That’s what it’s supposed to be controlling,” said Baysinger. “Yeah,
that’s the contract that was purchased; it’s like any other contract.”
“And they know that!,” Bourhis responded. “So what they do is, they have
all the leverage, they have all the chips.”
Melinda Carstens sued to get her son’s benefits back and won. But as to
whether her battle with the insurance company is ever really over?
“They just keep coming,” Carstens said. “Finding ways to save money.”
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